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Posts tagged ‘Service level’

As a Payroll Manager, you are responsible for managing what is the greatest cost of most organisations and with that comes the continued attention of Finance, C-Level Management and the Board. You are being monitored and usually measured on cost and efficiency and you are always at risk of being outsourced to a more viable option.

As a manager of a service offering in your organisation, you need to be a “business” manager who is focused on achieving organisational goals and outcomes, on providing service to your “customers” that could not possibly be matched by competitors and on the cost of payroll production.

If you are not already measuring, monitoring and acting upon Key Performance Indicators (KPI’s) in your payroll service, you need to start NOW.

KPI’s are quantifiable indicators that reflect the organisational goals and are supposed to be drivers of change and measures of progress.

Payroll has long been viewed as a purely transactional processing cost centre, whose only organisational goals are to minimise the cost of processing and keep payroll noise to an absolute minimum. While these are primary goals for cost reasons, many other complexities come into play as to why payroll costs what it does.

Only by measuring and taking calculated steps to improve the KPI’s, will you be able to truly reduce payroll costs, as many of the reasons for the cost of payroll are completely outside of the Payroll Managers control such as data integrity, industrial complexity and statutory requirements for example.

Personally, I have a few issues with the apparent simplicity of payroll KPI’s and the comparison of organisations against each other, or against best practices. The measurement of cost, transaction volumes and time to complete tasks alone does not truly measure the performance of a payroll team as there are an abundance of variables coming into play for every number recorded.

No two payroll operations are like for like. There are different operating systems, differing policies and company practices, differing complexities and differing definitions of end to end payroll.

I also believe that the global standard for compilation of payroll KPI data misses three very important categories: Service Excellence, Best Practice Business Processes and Compliance.

A payroll service’s primary function is to produce on-time, compliant employee payments… but getting the money into employee’s hands is far from the end of the payroll process. Management and statutory reporting can be a huge portion of a payroll team’s workload, as can be the day to day enquiries of the workforce and other organisations relating to employee payments and financial matters.

Additionally, every payroll service on this earth, no matter their size, should aim to have best practice documented processes, checklists, segregations of duty and audit steps throughout the process, so this should be included in the KPI’s and be a major objective of the payroll team and the organisation.

These are the Minimum KPI’s Payroll Should Be Measuring as per global industry practice:

(HR/P&C KPI’s are excluded as the focus is solely on payroll production)

THE COST OF PAYROLL – intends to measure the cost to business of the end to end payroll process, which usually encompasses the sum total of wage and operating costs of the payroll team and the cost of implementing and maintaining HRIS and related systems. For a true cost of end to end payroll, all people in the organisation that contribute to any component of the end to end payroll process should be identified and accounted for such as:

IT costs involved in implementation and maintenance of HRIS and related systems

Payroll Accounting costs

The wages cost of staff compiling timesheets for payroll input

Supervisors and management wages cost for time spent on payroll processing and enquiries

HR/P&C wages cost for time spent on the transactional components of payroll processing

The combined results of these metrics will assist you to determine the cost drivers of payroll production:

Cost of Payroll (Total Wage Cost All Employees) as a Percentage of Revenue

Number of Payroll Processes Per Annum

Cost of Payroll Production Per Employee Serviced (Total Operating Cost of Payroll Service per employee serviced by the payroll)

Cost of Payroll Production per Payroll FTE

PRODUCTIVITY – intends to measure how productive the payroll team as a whole and individually are, by measuring the ratio of payroll people to the number of employees being serviced. Additional metrics allow identification of issues affecting productivity. Standard metrics include:

Number of Pays Processed Per Payroll Processor FTE

Number of Out of Cycle Payments Processed

Number of Retrospective Payments

Number of payments requiring manual intervention or follow up

Input that contains unclean data

EFFECTIVENESS – intends to measure whether the payroll team are achieving the required outcomes (on-time, compliant payroll production) and identify factors that may be inhibiting their effectiveness. There are a host of metrics utilised to measure effectiveness and include:

SERVICE – regular measurement of the perception of service by those we serve, including:

A regular rating by employees to establish the current perceived level of service and identify improvement areas (perceived or real)

A regular rating by your internal customers and by supervisors and management on their perception of the payroll service

Regular ratings against the achievement of Service Level Agreements

Compilation of data on queries such as long term unresolved employee queries, union action as a result of payroll actions and other day to day categories of enquiry in order to identify service demands and improvement areas

COMPLIANCE – as a core function of the payroll service, measurement of the continued achievement of organisational and statutory compliance including:

Outcomes of audit reports

Compliance with company policies and procedures

Achievement of management reporting deadlines

Correct, on time and compliant statutory reporting and payments

Achievement against monthly internal compliance reviews

Breaches of employment legislation , award requirements, etc

Breaches of service level agreements

BEST PRACTICE BUSINESS PROCESSES – there is enough global evidence, supporting legislation and standards that demand that all payrolls should be produced utilising best practice business processes to ensure corporate governance, financial transaction security and so on. The measurement of the payroll service’s achievement towards best practice business processes should identify:

All processes and sub processes in the production of payroll are documented and reviewed regularly for compliance and best practice

Documented checklists are utilised for payroll processes and signed off by relevant overseers at each vital step of the payroll process

Payroll balancing is exhaustive and each authoriser throughout the process understands the full extent of what they are authorising

Segregation of duties is well documented, authorisations are achieved and a process for monitoring each step of the payroll process exists

Error identification and fraud prevention process checkpoints are included throughout the processes and checklists

Business policies are documented for information security, confidentiality, privacy, authorisations, etc and the requirements of each policy are implemented within the processes

If your payroll service is measuring and monitoring the metrics and KPI’s listed, I applaud your efforts! If you are part way there, then I urge you to build in these additional KPI’s and identify further improvement areas for your service. If you are not measuring, open up a new excel spreadsheet NOW! and start pumping in the numbers you need to measure your base line data.

The data on its own though is insufficient, as you need to identify targets for each of your KPI’s and monitor these as you implement your improvements, to ensure your efforts are actually achieving the intended outcomes.

Many payroll services benchmark themselves against others, or against industry, country or global best practice KPI’s. Before deciding how you will utilise benchmarking, it is important to understand the dynamics behind the numbers. Essential to your understanding though, is that you must drill down into the numbers to understand the measurement method of the benchmarks you apply; the complexities of the organisations you measure yourself against; the HRIS systems and processes in place; and a host of other reasons that another payroll service may be producing twice as many employee payments as your team, with half the staff.

Remembering that KPI’s are quantifiable indicators that reflect the organisational goals and are supposed to be drivers of change and measures of progress, it is imperative that you understand what the goals actually are for the payroll service and include measurements that will provide actionable data that identifies what issues exist and what improvements need to be implemented.

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.

The term ‘Payroll Service’ is often an oxymoron, for in many organisations where there is a payroll department, there is a complete lack of actual customer service. Please don’t take offence, I know we all work hard and have relenting deadlines to achieve, but we as an industry need to take a good hard look at instilling service excellence, and some individuals in the industry, just need to learn to treat others as they would expect to be treated.

Almost every day of your life you have a customer service experience. You owe it to yourself and your customers to take stock of these experiences and note how each interaction affects you emotionally and ask yourself honestly, if your customers experience the same emotions in their dealings with you or your team. The basic emotions people experience in a customer service situation are one of: Joy; Satisfaction; Frustration; Disappointment; or Anger. It is up to you how each customer walks away feeling.

There are a few things in payroll I am an advocate of: compliance, efficiency, integrity and service excellence. The first three are relatively easy enough to turn the tables on with some effective management and some good business practices. Service excellence though, is the tough cookie. You, your team, your culture, your leadership and your business processes will determine the level of service that is achievable.

Important steps to achieving service excellence are:

Understanding exactly what service excellence means

Understanding the current perceived level of service – yours, theirs and the reality in between

Taking a serious look at your interactions with your customers (every single person or entity you transact with) to identify your “moments of opportunity”

Deciding what service excellence would actually look and feel like at each of those “moments”

Setting the wheels in motion to elevate your service standards and practices

Understanding Exactly What Service Excellence Means

Service is defined as an act of helpful activity; to help or aid; to do someone a service

Excellence is defined as the fact or state of excelling; superiority or eminence

To achieve service excellence, you don’t need necessarily require a budget, you don’t need to employ a management consultant and it’s not entirely necessary to implement an enquiry management system. You do need however, to make a decision as a team to define what the standard will be and commit to exceeding it, and you absolutely will need to build solid processes and business systems to consistently achieve excellent outcomes.

Understanding the Current Perceived Level of Service

In the standard payroll office, you usually never hear from your main customers – the employees – unless they perceive there is a problem. You don’t have people ringing in to thank you for a pay well done. So if your phones are ringing off the hook, you have some serious work to get through to become a service centre of excellence.

If your phone is not ringing off the hook with payroll queries though, don’t think you can sit back and relax. Are your customers happy? Are management satisfied with your performance? Do people in the organisation value your work? Just because the pays are being processed correctly, does not mean that your customers are happy with your service.

You will need to obtain some brutally honest information from employees and management, such as what they think of your service; what they would like to receive from you; where they think you could improve; and what they think could be done differently.

Going down this road can be a difficult one for some, as you will always receive some seriously negative feedback, at the very least. Your opportunities though are endless, as you can justifiably and quantifiably turn around the service levels and increase staff morale. If you ask the right questions, you will receive invaluable information to assist you in turning your payroll process into a valued service centre.

There are various ways to find out how your service is perceived:

Conduct a service survey with your management and employees

Conduct open feedback sessions with small groups of your customers

The simplest one of all – constantly listen to what people are asking and telling you in their daily queries

In addition to understanding what your customer’s perception of your service is, it is imperative to understand your payroll team’s perception of their own service. Do they think they are providing brilliant service? Can they identify opportunities for improvement?

As anyone in service or management should know, the key to identifying service opportunities is to understand the “pains”. Wherever someone experiences an issue, a dissatisfaction or cries out for a better way, these are the where the opportunities to implement improvements exist.

If your customers have difficulty accessing information, this is a “pain” that can be addressed by making it easy for them to access the information they need. If your payroll team are overwhelmed with enquiries, you can address your team’s “pain” by implementing a FAQ or building a system to ensure the common queries are answered pre-emptively.

If management are consistently seeking reports from your team, build these in to your processes as automated functions and make them available for use by management. The possibilities to eliminate pain points are endless.

Take a Serious Look at Your Customer Interactions

Once you’ve asked all the right questions of your team and your customers to establish the perception of your service, you then have to fill in the reality between the two, by taking a good hard look at how your service is conducted. Ask the following questions as a starting point:

How does your team interact with customers? Are they helpful? Are they respectful? Do they welcome customer interaction or dread it? Do they explain or blast policy or rules at them? Is their conduct of an excellent standard? Are customer queries an interference to their work at hand?

What do you provide? What is the standard of it? Is it professional? What purpose does it service? Is it useful?

Is there quality and efficiency in the processes involved in responding to enquiries?

What are the commonly asked questions and requests? Should you be pre-empting these and delivering information and resources to minimise or eliminate the questions and requests?

How difficult is it to do business with your payroll service? Is someone available at all times to respond to questions? What are the wait times or turnaround times on responses? Do you enforce unreasonable shut off times? Do your team members send all calls to voice mail when they are busy?

Deciding What Service Excellence Will Actually Be

You, as the Manager, need to determine what the acceptable service standards will be and what “excellence” will look like. Based on your team members, your opportunities and constraints, based on the outcomes required of your position and based on the political arena of your organisation.

If you have a Service Level Agreement (SLA) in place, obviously you will need to ensure you continue to meet, or exceed, the service levels defined in the agreement, but in the process of transforming your service levels, this may also be a great time to revise the SLA and make it more meaningful and service oriented.

One of the things I am always astounded by is that payroll teams are happy enough to shout that payroll is a “critical” business process when it comes to requiring the support of IT and other teams to get the payroll into the bank accounts on time, but they don’t always assume the same “critical” determination to an individual employee whose pay has been missed or short paid. This is a key area for improvement and would be one of the employee’s greatest pain points in many organisations.

Recognise that while a non-payment or a short payment to an employee may simply be perceived as a transactional error to someone in your team, who has more important tasks to achieve today, to the employee though, this may mean the difference between feeding their children or putting petrol in the car for another week. It is never our job to judge, but to deliver on the promise of on time and in full payment of wages.

Setting the Wheels in Motion to Becoming a Service of Excellence

Implementing a Service Charter or a Service Standard would be a great starting point for determining the base line of your service levels. As the Payroll Manager, you must start with a foundation of what you want your Customer Service Charter to be and then involve your staff to help build it.

I would recommend calling for submissions, then building a draft document for your team to work on further. This approach shows them that you value their input and gives them ownership from the onset. Once the charter or standard has been established, have it printed and have all team members sign the document. Post this document in a prominent position in your work area and if you are really committed, hand it out to your customers.

Further to the Charter or Standard, you then need to start drilling down on particular pain points and moments of opportunity, and start working out how you can transform your service with each of these.

Included in the foundations to great customer service is creating relationships with them and respecting them. Work on ways to get your staff to meet, to learn about and to put faces to the names they interact with on a daily basis, such as:

Include staff members on site visits

Place photos of customers and little snippets of information where your team can see it constantly and ‘get to know’ their customers

Keep a database on your customers and log all their calls, issues, complaints, praises

Have your staff take turns to ensure that every single customer is contacted on a regular basis to ask if there is anything they can do for them to improve the service.

Embed the achievement of service standards into your team’s position descriptions, performance objectives and outcomes and as a baseline measurement for salary reviews to “encourage” your team to deliver on the standards and to understand the importance of servicing their customers well.

Start building the tools, resources and processes to deliver your new levels of service. Begin setting in motion as many small changes as you can, while simultaneously working on the larger scale improvements. Here are just a few ideas for you:

Employees

One of my pet hates is “onboarding”, where there seems to be a fairly common care factor of zero that a new employee is desperately waiting on their first payment. The number one task of a payroll service is to pay employees correctly and on time and many fail to achieve this for new employees. New employees sometimes have no idea when they will receive their first payment. If they were lucky enough to have completed their paperwork prior to commencing, they presume they are set up in the system. Communicate with them and with the person responsible for their paperwork, make it easy for them, give them expectations and delight them with your efficiency

Attempt to be available to your employees during their working hours, which is difficult if your business has 24/7 shifts, but technology exists to stretch your opening hours beyond 9-5

Give them information that assists them to make informed and timely payroll decisions and submissions

Don’t shut off the phones because you are busy processing payrolls or having a meeting. Always have someone available to pick up the calls

Make it easy for people to reach the right person, post it on the lunch room walls, post it on the intranet, print it on the pay slips, give your supervisors and managers a handbook, do what you have to do. Let them know who is who and who is next up the line if they run into issues

Build an employee handbook or an intranet knowledge base to share deadlines, FAQ’s and include updates on information such as taxation changes, public and school holidays, employee benefits and more

Employee self-service is still unheard of in many businesses even though the benefits and ROI are well documented. If you haven’t got it, start pushing for it and if you have, start exploiting it for all it is worth. I know of major organisations who refuse to allow their employees to edit certain areas of employee self-service, specifically bank accounts as they believe it will cause more drama if the employees enter them incorrectly. Make the employees explicitly aware of the format required and the consequences of getting it wrong and you shouldn’t have any major issues, considering it’s in the employee’s best interest to get it right

Internal Customers

Become a vital information resource for the business units you serve by understanding what the information requirements are and finding ways to consistently provide automated information that they can access, rather than continually request from you

Understand the deadlines that others are working to in order to prioritise the requests for information

Understand what business managers are attempting to do with the information they request, so you can provide it all correctly in the first instance and not have to reproduce reports or rework data and calculations

External Customers

Requests for information from external sources and verification of employment queries can be a relentless and time consuming exercise. Put in a system to simplify the process, mandate internally what the target turn-around times will be and create a report in your HRIS system that automatically produces the data to make the process efficient. If you have the luxury to do so, allocate these automated tasks to a junior level team member.

Once you start implementing service focussed improvements into your operations, your customers will see and feel the shift. You will earn greater respect from your customers because they will know you value them. You will enjoy stronger business relationships with people throughout your organisation and while your team may not be so thankful in the beginning, they will be once you’re on the right track and they are under much less pressure.

Service excellence is achieved by doing the thousand little things right, and working your butt off to consistently do all those little things with excellence.

If you have any questions or some thoughts you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.